Economic and business environment
In January 2011, Fresenius Medical Care signed a purchase agreement to acquire International Dialysis Centers (IDC), Euromedic International’s dialysis service business. This opportunity will help us to expand our position in the provider business in Eastern Europe, a key component of our overall growth strategy. IDC currently treats over 8,200 hemodialysis patients and operates a total of 70 clinics in nine countries, predominantly in Central and Eastern Europe. The purchase price for IDC was €485 M. The transaction remains subject to approval by the relevant anti-trust authorities and is expected to close in the second quarter of 2011. On completion, the acquired operations will add approximately $180 M in annual revenue and are expected to be accretive to earnings in the first year after closing the transaction.
Following the acquisition of IDC, Fresenius Medical Care successfully placed two senior unsecured bonds worth $650 M (coupon 5.75%) and €300 M (coupon 5.25%) with institutional investors. Both are due 2021. Net proceeds from the offering amounting to approximately $1.35 BN will be used to repay financial debts, for acquisitions including the takeover of IDC and for general purposes to support corporate activities in the renal products and services business.
Also in January 2011, Fresenius Medical Care announced that it had signed a cooperation agreement to provide comprehensive dialysis care to patients in the Murcia region in Spain. The contract will be effective from mid-2011 and allows us to provide dialysis therapy to approximately 200 renal patients in the region, for which Fresenius Medical Care will receive a flat-rate reimbursement per patient based on the quality of the services performed. Murcia is the first region in Spain to convert its reimbursement structure from a “fee-for-service” model to a flat-rate system. More information on this can be found in the “Health and reimbursement systems” section.
No further significant events took place between the closing date of December 31, 2010, and the annual report’s printing date of March 11, 2011. There were no fundamental changes in the economic and business environment in our field of activity. Dialysis continues to be a medically indispensable and lifesaving treatment for acute or chronic kidney failure for which there is no comparable alternative with the exception of kidney transplantation. Therefore, Fresenius Medical Care is active in a relatively stable business area that is only exposed to economic cycles to a small extent.
We are currently not planning any major changes in Fresenius Medical Care’s organizational structure, administration, legal form or with regard to personnel which could lead to a significant impairment of the asset, financial and earnings situation of our Company.